Mahamaya Steel Industries Ltd Management Discussions

The steel sector is not only vital to the global economy but also plays a critical role in the economic growth of any country. The industrys impact on the economy goes beyond its direct contributions to GDP. Steel is one of the most important and widely used materials in the world. It is used in construction, transportation, manufacturing, and many other industries.. The production and consumption of steel have a significant multiplier effect on other sectors of the economy like infrastructure, transportation, automobiles etc. Steel is also an essential material for the energy sector, as it is used in the production of wind turbines and oil rigs. Furthermore, the steel industry is a key player in international trade. India is the second-largest producer of steel in the world, after China. The demand for steel in India has been robust in the last one year, driven by the governments infrastructure projects and the support extended to the manufacturing sector. The stainless steel market in India has also witnessed growth in the last one year. The demand for stainless steel has been driven by the construction, automotive, and consumer goods industries. The growing awareness of the benefits of using stainless steel, such as durability and corrosion resistance, has also contributed to the growth of the market However, the industry has also faced some challenges such as the shortage of raw materials, ongoing war between Russia and Ukraine, effect of the COVID-19 pandemic on the global supply chain etc. But despite these roadblocks, the steel manufacturing sector has been striving hard to ensure its growth and India is one of the few countries where maximum new capacity both by way of greenfield and brownfield initiatives.

The Global Economy

The global economy continues to show resilience despite facing several strong headwinds viz., the Middle East crisis. Russias invasion of Ukraine, high inflation, high costs and falling household purchasing power, rising geopolitical uncertainties, and forced monetary tightening. Global growth is estimated to sustain at 3.2% in 2024, similar to 2023, The economy is better placed now than at the same time in 2023, with the risk of a global recession receding. In late 2023, headline inflation neared its pre- pandemic level in most economies for the first time since the start of the global inflation surge.

As global inflation descended from its peak, economic activity grew steadily, defying warnings of stagflation and global recession. The United States with some middle-income economies displayed strong economic performance, with aggregate demand supported by stronger than expected private consumption amidst still tight though easing labour markets. Continuing geopolitical tensions, including the Middle East crisis, Russia-Ukraine war and the upcoming US presidential elections pose a risk to dampen growth in 2024.

The Indian Economy

Indias economic growth has been resilient against global headwinds for three fiscal years now. Policy and regulatory support and prudence have helped, as has the gradual reinvigoration of the private sector. The Countrys attractiveness as an investment destination remains robust, given the size and scale of operations it has to offer to global companies, abundant skilled talent pool, and prowess in technology and innovation. The industrial manufacturing sector has experienced a significant boost, attracting global technology giants to expand their supplier networks within India. This momentum is further supported by the implementation of state industrial policies that complement sector specific incentive schemes. Concurrently, substantial investments in logistics and infrastructure development, including the construction of new roads, highways, and rail tracks, underscore the Governments commitment to bolstering this critical sector. Capital spending by the Government and strong manufacturing activity have meaningfully contributed to the robust growth outcomes in 2023.

Various Production Linked Incentive (‘PLP) schemes have revived the manufacturing sector post pandemic. They are helping build up critical value chains and industrial clusters, besides expanding the Countrys export basket. Overall, the PLI schemes have brought in a new regulatory framework, which

can be aligned to address industrial and manufacturing technology deficiencies and improve output The Government is also contemplating extending the scheme to further sectors, to develop new segments in labour intensive sectors.

Outlook

The basic aim of the Company is to be able to produce Steel Structural as per market requirements and be able to manage market trends to its advantage. "Opportunities abound in growing economies and opening of economy in India has created opportunities for Indian enterprise to move beyond national boundaries as well to create productive assets.

The outlook for the industry looks reasonable, since India has good iron ore deposits, skilled manpower and growing demand for steel. The improved demand is expected to continue in the current fiscal as well on the back of ongoing government funded infrastructure projects. In spite of a downturn in the Global Steel demand, Indian steel demand could survive showing an upward trend, setting a road ahead for the growth of the domestic steel industry in the long run. The upward trend is expected to be continued on account of fiscal measures taken by the Government such as infusion of funds for development of infrastructure sector, introduction of stimulus packages for revival of industry besides factors like increase in consumption and production of steel, upcoming infrastructure and Greenfield projects, stabilization of prices etc.

Risk and concerns

Margins in the Engineering Industry continue to be under pressure. We are continuously up-grading our skills, modernization, and cost saving. Risk and concerns are being addressed on a continuous basis. The business has weathered the challenges posed by the COVID-19 pandemic by adopting safe working practices, encouraging work from home whenever needed, increasing the virtual meetings, virtual audits and inspections, online approvals amongst other measures.

The Banks are cautious in their lending to the Corporate Sector perhaps on account of large Non- Performing Assets (NPA). This has impacted the investment by Public and Private Corporate Sectors in their expansion plans.

Mitigation of Risk /Risk Management

The Board identifies and categorizes risks in the areas of operations, finance, marketing, regulatory compliances and corporate matter. The Company re-views periodically the "List of Risk Area¹ to identify potential business threats and takes suitable corrective actions. Confirmations of compliance with appropriate statutory requirements are obtained from the respective units/divisions. The Internal Auditor expresses his opinion on the level of risks during the audit of a particular area and reports to the Audit Committee.

The Company also has in place a Risk Management Policy and Procedure tor mitigating risks and managing as well as recording them. Further, corrective actions / steps are being taken as and when necessary, in a continuous manner.

Internal Control Systems and their Adequacy

The Company believes in systematic working and placing of proper checks. The Company has proper and adequate system of internal controls commensurate with its size and nature of operations to provide reasonable assurance that all assets are safeguarded, transactions are authorised, recorded and reported properly. The internal auditor of the company conducts audit of various department and areas. The Internal Audit Department reports its findings and observations to the Audit Committee which meets to review the audit issues and to follow up implementation of corrective actions. The statutory auditors also provide assurance on the adequacy of the internal control systems in the Company.

Discussion on financial performance with respect to operational performance.

Mahamaya Steel has been consistently upgrading its facilities and investing in new facilities to meet customer requirements. Continuing its commitment, to enhance the efficiency in Production and also to reduce power consumption cost we have taken effective steps by replacing two old furnaces with new one in the year 2022-23 with approx 4 Crores capital Expenditure and in the year 2023-24 by replacing one old furances with new one and one more furnace is in the final stage of replacement with new one from which production will be started in the first week of July, 2024 with approx. 5 crores Capital Expenditure

We have also installed one more new CCM set up with hot charging facility so that there will be direct feeding of raw material from CCM to our 3 rolling mills 16 inches, 26 inches and 28 inches, this will help to reduce the fuel cost and the old CCM will be kept stand by that can be used in times of breakdown. One new CCM was installed last year also.

We are also thinking of setting up a solar power plant whose capacity will start from 12 MW and will go up to 100 MW, the complete set up of same will cost Rs 450-500 crore approx. The search of land, appropriate parties for entering in Memorandum of Understanding and other things is under process. Very soon we will be able to complete it.

During the year under review the Company had achieved a total revenue from operations Rs. 78382.88 Lacs as against Rs. 64977.18 Lacs in the last Financial Year. Further the Profit before tax stood at Rs. 627.36 Lacs as against Rs 601.05 Lacs in the last Financial Year.

The financial performance of the Company has been discussed better in Directors Report under the heading "Financial Performance and the State of the Companys Affairs".

Human Resources and Industrial Relations

Human Resources Department ("HRD") works continuously for maintaining healthy working relationship with the workers and other staff members. The underlying principle is that workers and staff at all levels are equally instrumental in attaining the Companys goals. Training programmes are regularly conducted to update their skills and apprise them of latest techniques Senior management is easily accessible for counselling and redressal of grievances. The HR department continuously strives to maintain and promote harmony and coordination among workers, staff and members of the senior management. The total number of employees as on 31* March, 2024 was 462.

The HR department of the Company is continuously in touch with the employees to guide them and solve their problems, The Company has maintained healthy and cordial industrial relations during the year

Key Financial Ratios

In accordance with the SEBI (Listing Obligations and Disclosure Requirements 2018) (Amendment) Regulations, 2018, the Company is required to give details of significant changes (change of 25% or more as compared to the immediately previous financial year) in key financial ratios

The Company has identified the following ratios as key financial ratios:

Reasons for variance

a. Efficient collection mechanisms has led to improvement in Trade Receivables turnover ratio

b. Efficient use of Capital indicates improvement in Return on Capital Employed ratio

Cautionary Statement

The Management Discussions and Analysis describe Companys projections, expectations or predictions and are forward looking statements within the meaning of applicable laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include economic conditions affecting demand and supply and price conditions in domestic and international market, changes in Government regulations, tax regimes, economic developments and other related and incidental factors.